A term plan is a form of life insurance policy that offers a death benefit. Term insurance policies do not come with any maturity benefit. Hence, you might find yourself asking ‘‘is term life insurance worth it’’ and to know that answer you have to understand the many benefits it comes with.
This pure form of life insurance policy brings peace of mind and financial stability to a family when the sole bread earner passes away before time. Explained ahead are points that validate the fact that term insurance is an ideal insurance solution.
- Term insurance is not a waste of money
Many investors believe that the term plan is a waste of money because it has no maturity benefit. However, you need to change your perspective to realize that a term insurance policy is an important investment instrument. You need it to protect the future of your loved ones who depend on you for financial support. When you buy a term policy, you ensure that your family’s future will be safe in your absence.
- Term plans are cost-effective
One of the most important benefits of term insurance is that it is affordable. Life insurance policies are costly in general because they have both death and maturity benefits. On the other hand, term policy offers no maturity benefit, so you need to pay a lower premium for a life cover. In addition, the sum assured for the death benefit his comparatively higher too. All of these make it a cost-effective option.
- Term insurance helps you to make better financial plans
As the term policy requires lower premiums, you can use the money to invest in other products. This way, you will be able to make better financial plans and grow your fortune. Apart from life insurance, the money can be invested in products that ensure high return.
- Term insurance protects against liabilities
One of the advantages of term life insurance is that it ensures that your family has the funds to repay your liabilities during your absence. In case of an untimely demise of the policyholder, the nominees receive the death benefit, which can be used to settle loans the insured did not have the chance to repay.
- Term insurance offers the flexibility to opt-out or convert
It is easy to opt-out from a term plan, as it has no investment or maturity benefit. At any moment, if you cannot afford to pay the premium, you can just stop paying them. It is also simpler for you to convert your term plan into a regular life insurance policy. This flexibility makes term insurance an attractive choice.
- Tax benefits
The term life insurance policy also offers tax benefits. Section 80C of the Income Tax Act, 1961 allows a tax deduction of up to INR 1.5 lakh on the premium paid towards the policy. This is an effective way to save on taxes.
With all these great benefits, a term insurance policy surely is a great product to help you protect your family from financial worries and provide you with peace of mind.